How do I calculate NET amount after taxes for the contract job taken in Toronto in year of 2016? Let's say, for example, I did my job for 50 CAD/hour before any taxes.
I am residing in Toronto since June of 2016. My client is in Toronto as well.
You pay a lot of taxes that are not linked 1-on-1 with a single job, so you'll never get an exact number for that. However, as a freelancer I use a very simple calculation that works accurate enough so far (the same might exist for Toronto): taking ALL taxes into account, basically 50% of what I invoice is NET, i.e. if I take all my revenue at the end of the year and subtract all that I pay in various taxes (e.g. tax on the salary I pay myself, corporation tax, social security payments, profit tax, etc.) I'm left with 50% to actually spend on net salary, investments, expenses etc.
As an unincorporated independent contractor, your income from contract work will be subject to tax as personal business income. Your net income can be calculated with the formula:
(Gross Income - Expenses) x (1 - Tax rate)
Below are the taxes that make up your tax rate:
To find the average tax rate, use the formula for each federal and provincial:
(Total Tax - Income Tax Credits) / Taxable Income
Tax rates and calculations ca be found here: http://www.cra-arc.gc.ca/tx/ndvdls/fq/txrts-eng.html
Tax credits vary on your personal situation, but always include the basic $11,474 for federal tax and $10,011 for Ontario tax.